Greece's long-running crisis has culminated in its downgrade to
emerging-market status and its exit from the club of developed
nations, according to one index provider.
Financial index provider MSCI Inc. (MSCI) cut Greece to
emerging-markets status from developed markets Tuesday. MSCI said
that Greece failed to qualify as a developed market on several
criteria, including securities borrowing and lending facilities.
The firm had put Greece under review to become classified as an
emerging market in June 2012.
Investors look to changes in MSCI indexes as they are largely
followed as benchmarks for both mutual and exchange-traded
funds.
MSCI estimates that nearly $7 trillion is benchmarked to various
MSCI indices on a worldwide basis. About $1.4 trillion is
benchmarked to the MSCI Emerging Markets Index.
Qatar and U.A.E., meanwhile, will move up to the emerging
markets index from the frontier-markets category previously, MSCI
said, which cited regulatory improvements in these markets.
This upgrade could potentially trigger millions of dollars in
foreign investments from funds tracking MSCI's emerging market
gauge.
South Korea and Taiwan, however, will maintain their status as
emerging markets, MSCI said. The firm has kept South Korea under
review for a potential upgrade to developed-market status since
June 2008, while Taiwan has been under review for achieving
developed-market status since since June 2009.
Write to Erin McCarthy at erin.mccarthy@dowjones.com
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